"NEW YORK (AP) -- Shares of oil and gas well contractor Key Energy Services Inc. rose on Tuesday after Barclays upgraded the stock, citing the company's better long-term prospects in Mexico and confidence that land operations in the U.S. will be better than expected this year.
THE SPARK: Barclays analyst James C. West upgraded the shares to "Overweight," from "Equal Weight." He raised his price target to $10 from $7.
THE BIG PICTURE: Key's international operations were "severely impaired" by activity declines in Mexico, but energy reform there could help, West wrote. "We think the market has yet to fully appreciate the long-term impact that energy reform in Mexico could have on the service markets," he wrote.
West said Key has a solid growth plan in northern and southern onshore basins in Mexico, and "would be a main beneficiary of the increased shale activity likely to unfold" if Mexico does reform its energy sector.
Key is also set to benefit from increased drilling efficiency taking hold in the U.S., he wrote."